Afternoon analysis 16.02.2017

The data regarding the American jobless claims was positive, but it was not able to support the dollar. We could observe a similar situation in the case of the zloty. Positive data regarding employment in Poland had a limited impact on the Polish currency.

Dollar’s weakness continues

Today, the dollar continued its overvalue from yesterday. After initial appreciation caused by positive data regarding inflation, as well as the retail sales, the American currency had began to lose value. Even the data regarding the industrial production for January (negative 0.3%) could not stop this depreciation. The EUR/USD decreased by 1.2%.

At 14.30, the American Labor Department published the jobless claims data for last week. This index’s result was at the level of 239k, which was by 6k less than estimated. Moreover, this result is below the four-week moving average (245.25k). However, this was not sufficient to support the American currency. The EUR/USD remained near the level of 1.063. This caused the dollar’s index (DXY) to be pushed to the level of 100.5 points.

New positive data from Poland

The Polish Central Statistical Office published the data regarding changes in both employment and salaries in the company sector for January. Both of these indexes were a positive surprise. Employment increased 4.5% YoY, which is by 1.4 percentage points more than in December. Moreover, this result was better than estimated (2.8%). The average salary also increased by 0.3 percentage points.

However, the zloty’s reaction to this data was limited. Moreover, the Polish currency slightly lost value. The EUR/PLN went above 4.32.

Tomorrow’s events

Yesterday’s report from the British Office for National Statistics (ONS) has been eclipsed by negative data regarding salaries (more in yesterday’s analysis). This caused the pound to wear-off against the dollar. The GBP/USD was pushed to its lowest value in one week. However, this currency pair’s exchange rater returned to its level from before the data. Tomorrow, the market will receive new data, which may increase the pound’s volatility.

At 10.30 AM, the ONS will publishe the data regarding the British retail sales for January. This data is significant, because it shows the level of consumption, which is a significant factor of the GDP. After reaching the 7.2% YoY level in October, the retail sales index has been decreasing for two consecutive months (5.7% and 4.3% in November and December, respectively). The baseline index was at the level of 7.5% YoY, 6.4% YoY and 4.9% YoY in October, November and December, respectively.

Currently, the market consensus is at the level of positive 3.4% YoY (baseline index: 3.9% YoY). This result would mean that the depreciation trend continues. Moreover, it would be this index’s worst result since March 2016. If the data is better than expected, the pound may gain value.

At 2.00 PM, the Polish Central Statistical Office (GUS) will publish the data regarding the industrial production, PPI and retail sales for January. The industrial production decreased unexpectedly 1.3% YoY in October. However, this index quoted growths in two following months (3.3% and 2.3% in November and December, respectively). Currently, the market consensus is at the level of positive 8.1% YoY. This would be its best result since November 2015.

The retail sales index has been in the upward trend (6.6% YoY and 6.4% YoY in November and December, respectively). The market consensus is at the level of 7.7% YoY, which suggests that the positive trend would continue.

The PPI has been increasing gradually over the past few months. This was consistent with the global trends (USA, UK and the euro zone). The last quarter of 2016 showed a significant growth of its dynamics, by jumping from 0.2% YoY in September to 3% YoY in December. The latter was its highest result in four years. Judging from the global trends regarding increasing prices caused by a growth of the raw material prices, the upward trend will most likely be sustained. The market consensus is at the level of 3.7% YoY.

Tomorrow’s data may strengthen the zloty. After its recent appreciation, the Polish currency has lost slightly against the euro and went further away from the 4.30 level. If the above mentioned data is positive, the EUR/PLN may yet again be pushed below this level.